Suppose That Wind Em Corp A) $240,000
B) $3,333,333

question 84

Multiple Choice

Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that sales for the year just ended were $15 million. The firm also has a profit margin of 23 percent, a retention ratio of 40 percent, and expects sales of $20 million next year. If all assets and current liabilities are expected to grow with sales, what is the necessary increase in assets?
$$\begin{array} { l r l r r } \text { Assets } && { \text { Iiabilities ard Equity } } \\\text { Current Assets } & \$ 2,000,000 & \text { Current Liabilities } & \$ 2,500,000 \\\text { Fixed Assets } & 8,000,000 & \text { Long-tern Debt } &1,5000,000 \\& & \text { Equity } & 6,000,000 \\\text { Total Assets } & \$ 10,000,000 & \text { Total Liabilities and Equity } & \$ 10,000,000\end{array}$$

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Definitions:

Rent-Seeking Behavior

denotes efforts to increase one's share of existing wealth without creating new wealth, often through manipulation or exploitation of the political environment.

Principal-Agent Problem

A dilemma in which an agent, acting on behalf of a principal, may have incentives to act in their own interest rather than in the best interest of the principal.

American Winemakers

Individuals or companies in the United States that are engaged in the production of wine, contributing to the country's wine industry.

Government Functions

Activities and roles undertaken by government entities, including legislating, regulating, taxation, and providing public goods and services.